Are Higher Mortgage Rates Here To Stay?

Mortgage rates have recently been on the rise, capturing the attention of the media. In fact, headlines have been highlighting that these rates have reached their highest point in over two decades, as depicted in the graph below.

For those contemplating a significant move, this might feel like a setback. If you're uncertain about whether to proceed with your plans or delay, read on to gain a clear understanding of the situation.

How Higher Mortgage Rates Affect You: It's undeniable that mortgage rates are currently higher than they've been in recent years. When rates increase, it has a direct impact on the overall affordability of homes. Here's how it works: as rates climb, the cost of borrowing money for your home purchase also rises. This leads to an increase in your monthly mortgage payments for your future home loan.

The Urban Institute explains the current implications for both buyers and sellers:

"When mortgage rates rise, the monthly housing payments on new purchases also increase. For potential buyers, these increased payments can reduce the availability of affordable homes. Additionally, higher interest rates translate to fewer homes on the market, as existing homeowners are incentivized to maintain their low interest rates."

Essentially, some individuals are considering postponing their plans due to the current mortgage rates. However, the real question is whether this is a sound strategy.

Where Will Mortgage Rates Head Next? If you're eagerly awaiting a drop in mortgage rates, you're certainly not alone. Many are in the same boat, hoping for a favorable change. However, the reality is that no one can predict when, or even if, rates will decrease. Even experts find it challenging to provide a definitive forecast for what's to come.

While forecasts suggest that rates may decline in the coming months, recent data indicates an upward trend in rates. This discrepancy underscores the complexity of predicting mortgage rate movements.

The best advice when considering a move is this: avoid attempting to control the uncontrollable. This includes trying to time the market or predict the future trajectory of mortgage rates. As CBS News emphasizes:

"If you're in the market for a new home, experts typically recommend focusing your search on finding the right home purchase, rather than obsessing over the interest rate environment."

Instead, concentrate on assembling a team of knowledgeable professionals, such as a trusted lender and a real estate agent, who can keep you informed about market dynamics and their implications for your plans. Whether you need to relocate due to a job change, desire to be closer to family, or are in the midst of a significant life transition, the right team can help you achieve your goals even in the current climate.

Bottom Line: The best advice for your move is to avoid trying to control what's beyond your control, particularly mortgage rates. Even experts cannot predict their future trajectory with certainty. Instead, prioritize building a team of trusted professionals who can provide you with the guidance you need. When you're ready to kickstart the process, don't hesitate to get in touch with us.